US Credit Mkt Wk Ahd:Semi-Annual MonPol Testimony Center Stage

     CHICAGO (MNI) - While the semi-annual monetary policy report was released

on Friday, the highlight in the week ahead is Federal Reserve Chairman Jerome

Powell's testimony to congress on Wednesday (1000ET).

     Other speakers from the Federal Reserve fade into the woodwork next week,

despite the next media blackout period that starts midnight Friday and runs

through August 2, the day after the next FOMC policy announcement.

     Federal Reserve Chairman Powell preempted his policy testimony to Congress

next week by providing an interview on the economy to Marketplace Thursday, a

rehash of the June FOMC minutes and boilerplate policy jargon.

     Chairman Powell reiterated a generally positive view on the economy,

inflation "symmetrically" around 2%, economy in good place while "sustained"

high tariffs are negative for economy.

     "The administration says that what it's trying to achieve is lower

tariffs," Powell said. "So if it works out that way, then that'll be a good

thing for our economy. If it works out other ways, so that we wind up having

high tariffs on a lot of products and a lot of traded goods and services, let's

say, and that they become sustained for a long period of time, then yes, that

could be a negative for our economy."

     Recent minutes for the June FOMC stated "most participants noted that

uncertainty and risks associated with trade policy had intensified and were

concerned that such uncertainty and risks eventually could have negative effects

on business sentiment and investment spending."

     On Chairman Powell's testimony next Tuesday, TD Securities strategists

"expect him to reiterate the case for gradual hikes on the back of a tight labor

market but contained inflation."

     Reiterating touch-points from his unscheduled interview on Marketwatch

Thursday, TD said focus will be "on any comments on trade protectionism and the

yield curve along with operational procedures." Now that they are close to

achieving their dual mandate of price stability and maximum employment, the Fed

is "returning rates to a more normal level," Powell said yesterday.

     However, "if we move too quickly, then we can unintentionally put the

economy into a recession or cut off the return of inflation at 2 percent".

     Speaking of recession, the pace of Treasury yield curve flattening

continues unabated, down to levels not seen in 10 years, with inversion (a

recessionary signal) within easy striking distance. Incidentally, Eurodollar

futures strip is already inverting with December 2019 futures trading below the

December 2020 futures -- market starting to price in increased chances of rate

CUTS by the end of 2019.

     No Treasury supply and limited data on tap includes retail sales and

industrial production next week.

Calendar of next week's market events (prior, estimate): 

- Jul 16 Jun retail sales (0.8%, 0.6%) 0830ET

- Jul 16 Jun retail sales ex. motor vehicle (0.9%, 0.3%) 0830ET

- Jul 16 Jun retail sales ex. mtr veh, gas (0.8%, --) 0830ET

- Jul 16 Jul Empire Manufacturing Index (25.0, 20.0) 0830ET

- Jul 16 May business inventories (0.3%, 0.4%) 1000ET

- Jul 17 Jul NY Fed Business Leaders Index (21.4, --) 0830ET

- Jul 17 14-Jul Redbook retail sales m/m (-0.2%, --) 0855ET

- Jul 17 Jun industrial production (-0.1%, 0.5%) 0915ET

- Jul 17 Jun capacity utilization (77.9%, 79.3%) 0915ET

- Jul 17 Jul NAHB home builder index (68, --) 1000ET

- Jul 17 Fed Chair Powell semi-annual testimony to Congress 1000ET

- Jul 17 May net TICS flows 1600ET

- Jul 17 May long term TICS flows 1600ET

- Jul 18 13-Jul MBA Mortgage Applications (2.5%, --) 0700ET

- Jul 18 Jun housing starts (1.35m, 1.3m) 0830ET

- Jul 18 Jun building permits (1.301m, 1.3m) 0830ET

- Jul 18 13-Jul crude oil stocks ex. SPR w/w (-12.63m bbl, --) 1030ET

- Jul 18 1400 Fed Beige Book for upcoming FOMC 1400ET

- Jul 19 14-Jul jobless claims (226k, 220k) 0830ET

- Jul 19 Jul Philadelphia Fed Mfg Index (19.9, 22.0) 0830ET

- Jul 19 15-Jul Bloomberg comfort index (58.0, --) 0945ET

- Jul 19 Jun leading indicators (0.2%, 0.4%) 1000ET

- Jul 19 13-Jul natural gas stocks w/w (2,203Bcf, --) 1030ET

- Jul 19 US Tsy $13B 10Y TIPS auction (CUSIP: 912828Y38) 1300ET

- Jul 19 18-Jul Fed weekly securities holdings 1630ET

- Jul 20 Jun BLS state payrolls (269.5k, --) 1000ET

- Jul 20 Q3 St. Louis Fed Real GDP Nowcast (+3.58%, --) 1100ET

- Jul 20 Q3 NY Fed GDP Nowcast (2.6%, --) 1115ET

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]